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You can find the current article at its original source at https://www.theguardian.com/business/live/2017/oct/17/uk-inflation-wage-squeeze-mark-carney-bank-of-england-live
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| UK wage squeeze continues as inflation hits five-year high of 3% - business live | |
| (35 minutes later) | |
| 10.37am BST | |
| 10:37 | |
| BoE deputy governor: I didn't think rate rise was close | |
| Richard Partington | |
| Newsflash: The Bank of England’s newest deputy governor has revealed that he isn’t one of the policymakers who believe interest rates need to rise soon. | |
| Sir Dave Ramsden has told the Treasury Committee that he wasn’t among the majority at last month’s meeting who said that they were close to voting for a hike. | |
| Instead, Ramsden took the view that the UK economy was ready for higher borrowing costs. | |
| The majority of MPC members saw a case for removing some of the monetary stimulus in the coming months. I wasn’t in that majority. | |
| This was my first ever MPC member as a voter. I wasn’t in a position where I was part of that majority that thought - the way the degree of slack was diminishing, the way trade off between slack and higher inflation was disappearing - was sufficient to give that signal. | |
| *RAMSDEN WASN'T IN MPC MAJORITY SEEING HIKE IN COMING MONTHS | |
| Dave the Dove | |
| 10.34am BST | |
| 10:34 | |
| Scotiabank also blame the weak pound for driving inflation up: | |
| Scotiabank inflation analysis; “The acceleration in the CPI has been almost entirely due to the weakness of the GBP exchange rate.” | |
| 10.30am BST | |
| 10:30 | |
| Why Brexit vote has driven inflation up | |
| It’s clear that the slump in the pound after last year’s EU referendum is the main factor driving UK inflation up. | |
| These charts show how the cost of goods has spiked over the last year. Britain is a net importer of actual stuff, so a weaker pound means it’s simply more expensive to bring raw materials and finished products into the country. | |
| UK #CPI @ 3.0% YoY still being predominantly driven by imported goods prices. Core inflation, producer prices, wages & (less tradeable) services prices flat-lining. Tough call for #BOE beyond November #MPC pic.twitter.com/JEmWoMg74P | |
| In contrast, the eurozone’s inflation rate was just 1.5% in September, meaning most Europeans should be enjoying real wage rises. | |
| Open Britain, the campaign group against a Hard Brexit, argues that Britain can’t afford to lose full access to the Single Market. | |
| Inflation has increased to 3% -the highest of any major EU economy. It's time for Gov to put Single Market back on negotiating table. Pls RT pic.twitter.com/372g3UaTRU | |
| Nick Dixon, investment director at Aegon, fears that the pound could suffer fresh losses if Britain and Brussels don’t achieve progress in the Brexit taslks. | |
| While there are signs of a slowing economy, with sterling still at risk as Brexit negotiations remain inconclusive the British economy remains vulnerable to further inflationary forces. | |
| 10.22am BST | |
| 10:22 | |
| UNISON, the public sector union, argues that the government needs to produce a ‘decent pay rise’ to make up for years of austerity. | |
| General secretary Dave Prentis says: | |
| “There’s no light at the end of the tunnel for public service workers. Unfunded, below-inflation pay awards are apparently the best the government has to offer. | |
| “All public servants have seen the value of their pay fall year on year. They need a decent pay rise that more than matches the rising cost of living.” | |
| 10.18am BST | |
| 10:18 | |
| Treasury: We're trying to help people help with inflation | |
| The Treasury has responded to today’s inflation figures, arguing that the government is helping where it can... | |
| “We understand that families are feeling the effects of inflation and we are helping them with their living costs. We’ve frozen fuel duty, doubled free childcare for nearly 400,000 working parents and cut income tax for 30 million people. | |
| Increases to the National Living Wage are also delivering the fastest pay rise for the lowest paid in 20 years.”. | |
| 10.15am BST | |
| 10:15 | |
| Benefits freeze will hurt poorer families | |
| The Resolution Foundation points out that UK welfare benefits are NOT rising in line with inflation (unlike pensions...). | |
| This means that the poorest in our communities will find it even harder to get by next year, even if they are in work. | |
| Rising inflation means low-income working families with two kids will lose £315 from the benefit freeze next April pic.twitter.com/0pKCNebT5a | |
| 10.10am BST | |
| 10:10 | |
| Hannah Maundrell, editor in chief of money.co.uk, warns that rising inflation will eat into our Christmas budgets: | |
| “We’re now starting to feel the real impact of Brexit on our wallets. With inflation at a five-year high there’s no escaping the fact that the luxury of low inflation is well and truly over with prices of goods and services rising left right and centre and the shiny new pounds in our pockets will unfortunately buy you less. | |
| “Your household budget will be stretched as the cost of transport is creeping up and the price of fuel and food is also on the up. The cost of your supermarket shop is rising too so you must act now to protect yourself from future struggles. | |
| “Prices are rising faster than earnings and we are heading into one of the most expensive times of year – Christmas, so budgeting is key.” | |
| 10.08am BST | |
| 10:08 | |
| 3% rise in Sep inflation will mean pensions rising next yr faster than wages (or benefits), widening gap in intergenerational fortunes | |
| 10.07am BST | |
| 10:07 | |
| Retirees are the big winnners | |
| Britain’s pensioners are the big winners from today’s inflation report, thanks to the triple-lock that guarantees that their pensions won’t lag behind prices. | |
| So argues Maike Currie, investment director for personal investing at Fidelity International. | |
| She writes: | |
| “Life is getting much more expensive with an increase in the cost of food, fuel and a last-minute price spike in flights all contributing to the rise in inflation. Meanwhile, our pay packets have stagnated with wage growth falling behind inflation, despite UK unemployment being at a record low. | |
| “It’s also worth noting that September’s inflation figure matters hugely to both retirees and savers. Under the government’s ‘triple lock’ guarantee, the state pension will rise in April each year by whichever number is the highest out of the September CPI inflation number, average earnings or 2.5%. With inflation running higher than either wages or 2.5%, this will be determine the rise in the State Pension next year, arguably making retirees the biggest winners from today’s inflation figure. | |
| 10.00am BST | 10.00am BST |
| 10:00 | 10:00 |
| The Federation of Small Businesses is aghast that its members face a 3.9% increase in business rates next year, thanks to today’s RPI inflation report (details here) | The Federation of Small Businesses is aghast that its members face a 3.9% increase in business rates next year, thanks to today’s RPI inflation report (details here) |
| Mike Cherry, the FSB’s national chairman, says UK firms have suffered enough, following the controversial revaluation process that send some bills spiralling higher. | Mike Cherry, the FSB’s national chairman, says UK firms have suffered enough, following the controversial revaluation process that send some bills spiralling higher. |
| Today’s RPI figure follows six months of business rates misery for our small business community. | Today’s RPI figure follows six months of business rates misery for our small business community. |
| Since April’s bruising revaluation we’ve had the staircase tax, introduction of an unworkable appeals platform and chronic delays to the Chancellor’s £435 million relief package. A near four per cent bill increase next April, on top of losing year one transitional caps, will be the last straw for many. | Since April’s bruising revaluation we’ve had the staircase tax, introduction of an unworkable appeals platform and chronic delays to the Chancellor’s £435 million relief package. A near four per cent bill increase next April, on top of losing year one transitional caps, will be the last straw for many. |
| 9.55am BST | 9.55am BST |
| 09:55 | 09:55 |
| The TUC, which represents millions of British workers, says the government needs to respond to the ongoing wage squeeze that is hurting UK households. | |
| TUC General Secretary Frances O’Grady said: | TUC General Secretary Frances O’Grady said: |
| “The government needs to face up to Britain’s cost of living crisis. The squeeze on household budgets is getting tighter by the month. | “The government needs to face up to Britain’s cost of living crisis. The squeeze on household budgets is getting tighter by the month. |
| “The Chancellor must use November’s Budget to ease the pressure on hard-pressed families. | “The Chancellor must use November’s Budget to ease the pressure on hard-pressed families. |
| “That means giving five million public sector workers the pay rise they have earned. | “That means giving five million public sector workers the pay rise they have earned. |
| “Prices are sky-rocketing. Offering hard-working public servants below-inflation increases would amount to yet another real-terms pay cut.” | “Prices are sky-rocketing. Offering hard-working public servants below-inflation increases would amount to yet another real-terms pay cut.” |
| She also argues that the Bank of England should not raise interest rates from their current alltime low of 0.25% | She also argues that the Bank of England should not raise interest rates from their current alltime low of 0.25% |
| “Raising interest rates now would be a big mistake. The UK economy is simply not strong enough. | “Raising interest rates now would be a big mistake. The UK economy is simply not strong enough. |
| “We need to get wages rising before we start think about hiking rates.” | “We need to get wages rising before we start think about hiking rates.” |
| Updated | |
| at 10.21am BST | |
| 9.52am BST | 9.52am BST |
| 09:52 | 09:52 |
| Real wage squeeze continues | Real wage squeeze continues |
| This is one of the most depressing charts in UK economics today -- showing how UK workers’ pay packets are shrinking in real terms. | This is one of the most depressing charts in UK economics today -- showing how UK workers’ pay packets are shrinking in real terms. |
| With UK inflation hitting a 5-year high of 3%, real wages continue to be squeezed. Nothing to suggest this is going to change any time soon. pic.twitter.com/gY9sL35gfV | With UK inflation hitting a 5-year high of 3%, real wages continue to be squeezed. Nothing to suggest this is going to change any time soon. pic.twitter.com/gY9sL35gfV |
| As you can see, its the second wage squeeze in a decade. | As you can see, its the second wage squeeze in a decade. |
| 9.51am BST | 9.51am BST |
| 09:51 | 09:51 |
| The retail prices index, another measure of inflation, rose by 3.9% in September. | The retail prices index, another measure of inflation, rose by 3.9% in September. |
| That means that UK firms face a 3.9% rise in their business rates next year, under the current system. It could also drive up costs for motorists. | That means that UK firms face a 3.9% rise in their business rates next year, under the current system. It could also drive up costs for motorists. |
| RPI at 3.9% also suggests a fuel duty hike of nearly 3p per litre in April 2018 unless the Chancellor acts | RPI at 3.9% also suggests a fuel duty hike of nearly 3p per litre in April 2018 unless the Chancellor acts |
| 9.42am BST | 9.42am BST |
| 09:42 | 09:42 |
| Food and housing costs drove inflation up | Food and housing costs drove inflation up |
| Housing and household services costs were the biggest single factor driving the cost of living up, the ONS adds, partly due to utility bills. | Housing and household services costs were the biggest single factor driving the cost of living up, the ONS adds, partly due to utility bills. |